It is a common misconception among sellers that pricing your home the highest also translates to a higher selling price. In reality, however, this is not true, and an overpriced listing may be doomed to expire. On the flip side, pricing your home lower than the market estimate might not be as counterintuitive as you think. Doing so will attract more buyers, which can automatically drive up the listing price.
Thus, it is quite evident that pricing a home can be quite a challenging task, and it is as much an art as it is economics. Here are some essential things to consider when trying to ascertain a good listing price for your own home:
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Make a Note of Similar Listings
A Comparative Market Analysis (CMA) is the most accurate way of estimating the value of your property. You can do this by comparing the listings of properties similar to yours in a well-defined area over 3-6 months.
The search area largely depends on the location of your property. For example, if your home is located in a densely populated city, the search radius can be a mile. In contrast, if it is located in a rural setting, the search radius will be several times larger.
Here are some more details that you will need to consider while compiling similar listings are
- Desirability-Neighborhood dividing lines like streets, rail tracks, bridges can impact the value of a property. For example, two “apparently similar” homes on two opposite sides of such physical barriers can vary wildly in their value due to a difference in their perceived desirability.
- Property Age– The age of the property matters. For example, if one home was built in 2010 and you’re comparing it with another similar property that was built in 1980, they will differ significantly in their market value.
- Footage– Make sure that you are comparing properties within a set range of square footage. Ideally, this range should be within a 5-10 percent variance when compared to the square footage of the property that you want to list.
- Features– The homes that you compare should also have a similar number and type of properties like bathrooms, bedrooms, and garages.
Compare the Sold Listings
Sold listings are a great way to estimate the value of homes in your area. Make a list of the recently sold homes in your area and determine the ratio of the price differences between the original listing and the selling price to the final listing and the selling price. Apart from this, you should also make a note of the type of market that these homes were sold in:
- Buyer’s Market – The number of properties for sale is higher than the number of buyers available in the market. Homes sold in a buyer’s market tend to sell at equal to or less than the listing price.
- Seller’s Market – The number of buyers is more than the number of properties on sale in the market. The higher demand means that homes are sold at more than their listed price in a seller’s market.
Learn from The Mistakes of Others
Make a list of the expired listings in your area. If they were finally sold, then compare their original listing prices to their selling prices and determine how many price cuts were made. It will provide you with valuable insight into why the pricing of these homes was not competitive and what you can do to avoid that.
Find a Less Popular Price Range
If there are many active-listed homes in your area, the competition will force sellers to cut their prices in a way that is neither too aggressive nor too inadequate. This will lead to some price points being excessively crowded, leaving the others almost vacant. Properties listed in these vacant price bands tend to be more “visible” in the property market.
For example, if there are seven houses in your area and three of them are listed in the $350,000 price and range and the other four in the $400,000 price range, you can take advantage of this opportunity to list your own home in that vacant $350,000-$400,000 price band.
Visit the Active Listings
When pricing your home, it is imperative to put yourself in the shoes of what the buyer will experience and the price that they will expect from your property after the negotiation process.
A great way to do this is by visiting the active-listing homes in your area and note what you, as a buyer, would expect from that listing. Once you’ve done that, you can adjust the price of your own home to reflect those feelings.
Apart from getting an idea about the buyer’s perspective, this will also provide you with insight into your competition and what makes your property different from theirs. You can then factor that into your price adjustments to make your listing stand out in the market.
Adjust Your Listing Price to Meet the Demand
Even with the best market analysis and research, it is quite possible that you end up overpricing your home. If you do so, it is absolutely crucial that you decrease your price to make your listing more lucrative.
It can be quite tempting to make little adjustments to your listing over time to see where the demand ensures the maximum return on your listing. However, this can take quite some time and thus make your listing unattractive to buyers.
Accurate Pricing Ensures an Early Sale
Pricing your home requires exhaustive market analysis and research to ensure that your listing is not only competitive but also accurately reflects the value of your property.
Overpricing, as well as underpricing, can sow doubts in the minds of the buyers and drag on the negotiation process for long durations of time. Thus, it is important that you keep the aforementioned points in mind when pricing your home to make sure that you close the deal as early as possible and without any compromises.
Have Questions? Ask Trevandin Worley!
Give Trevandin Worley a call today at (864) 252-5120 to learn more about local areas, discuss selling a house, or tour available homes for sale.
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